Hotspot 3 – Getting the Funds from the Crowd: The Politics of Payment Infrastructure

In 2013, indie studio Lab Zero Games launched an IndieGoGo campaign to crowdfund the expansion of their game Skullgirls. It was highly successful, raising $829,049, well over its stated goal of $150,000.

“Sounds like someone needs to indiegogo/kickstarter an alternative to PayPal.”

Perhaps. In fact, KickStarter does not even use PayPal. A post on its company blog explains that after projects have been successfully funded, no refunds to backers are allowed and that Amazon Payments is the only payment intermediary able or willing to support this process.

But using Amazon Payments also has its own infrastructural restrictions. Because Amazon Payments does not support non-U.S. recipients, all KickStarter project creators had to hold a U.S. bank account. More recently, KickStarter has begun supporting U.K.-based creators, processing these payment themselves directly. By using PayPal, IndieGoGo is able to compete with KickStarter on its geographic reach, calling itself “The World’s Funding Platform.”

But alternative payment systems are rapidly proliferating, and most are hoping to make their reputation in the wake of frustration with PayPal. This has implications for “civic” crowdfunding as well.

One such rival, WePay, received attention when it became, according the Washington Post, the “de facto official” way to donate money to Occupy. WePay became popular among Occupy supporters in large part because PayPal had, in violation of its own terms of service, participated in an embargo of Wikileaks.

As a Wired blogger noted, there was an “element of theater” to Wikileaks’ struggles against censorship by its data and domain-name service providers because the information was mirrored elsewhere, including on more secure servers, but that the attack on WikiLeaks’ money flow was, in contrast, “the real deal.”
Indeed, according to Wikileaks, the embargo “blocked over 95% of our donations, costing tens of millions of dollars in lost revenue.”